In transactions involving the sales of goods and services on a short term credit basis, credit cards have become a major factor. However, the systems which have evolved to complete the transfer of funds and the settlement of accounts have placed increasing procedural burdens on the various persons and institutions involved in the processing. Such persons and institutions include the merchant, his bank of deposit, the several types of clearing houses, and the bank or other financial institution which has issued the credit card. Such processing has involved an undue amount of personal, individual interpretation, recording, and transfer of the data which is necessary to complete each transaction involved. This had added a substantial element of cost to the system, involving an increased cost burden, imposed primarily on the merchant, which is passed on to the public in an increased cost of the goods and services involved.
The investment in the established credit card transaction system is so great, that any procedural attempt to reduce the processing costs must be sufficiently simple, flexible and versatile to be able to accommodate itself to such existing system with a minimum of disruption.
There is an increasing objective, in funds transfer systems, toward the type of completely automatic system known as Electronic Funds Transfer or "EFT" usually interconnecting banks of deposit with the settlement banks. However, many banks do not as yet have the capability of offering EFT services. Nevertheless, almost without exception, banks conduct their internal accounting procedures by electronic data processing known as "EDP". As will be seen the present invention is completely compatible with both EFT and EDP Systems.
Credit cards systems not only involve transactions in which customers are charged for goods and services and for sums obtained under checking encashments, but also for transactions on which the customer's accounts are credited with sums for the return of goods and the like. As will be seen, the present invention has the capability of handling both charges and credits in a simple and expeditious manner.